Island Home Inn could go to bank
Island Home Inn owner David Chieffo is due in federal bankruptcy court on April 5 for a hearing to determine whether the inn will be taken by the major lien holder, Select Portfolio Servicing, Inc., or whether Chieffo will retain it under conditions set by the court.
Two bank liens on the property total $1,529,620, more than the $1,476,700 that the town’s assessor database estimates it is worth or the $1,395,000 the bank assesses it at. Select Portfolio Servicing claims it holds the note issued to Chieffo by First Franklin, a division of National City Bank in Indiana. Chieffo still owes $1,129,151.37 on that note. The company has filed an objection to a Bankruptcy Chapter 7 loss mitigation program already worked out by the U.S. Bankruptcy Court for the District of Rhode Island.
There is also a second mortgage, $400,469, on the property held by National City Mortgage, of which $134,620 is not secured by the property.
But mortgages on the inn, though the largest debts, are only two in a list Chieffo sent the court that totals 32 creditors and a total debt of $1,723,631.
Chieffo, as well as running the Inn, is a charter fisherman, and he’s in debt there too. A third secured creditor in the current filing is the Key Bank of Ohio, which holds a lien on Chieffo’s 29-foot Triton fishing boat and is trying to repossess the vessel. The amount of the bank’s lien, $90,961.13, is at this time higher than the value of the boat, which has been estimated at as much as $60,000 on Chieffo’s original Chapter 7 filing and as little as $25,000 in an estimate Chieffo filed from Lombardi Yacht sales. The bank set a current value of $51,650, which it obtained using a National Automobile Dealers Association guide for boats.
On March 23, Chieffo filed an objection to the bank’s motion to compel him to abandon the boat, and proposed a worth of $40,000. The Triton also has a mechanic’s lien of $6,099.84 against it, held by Mill Creek Marine, Inc.
Also among the creditors is the Town of New Shoreham Sewer District, to which Chieffo owes sewer bills for 2011 totaling $5,445.11; and Block Island Power Company, owed $3,722.32 for bills incurred in 2011.
As for the other debts Chieffo has accrued over the last few years, the loss mitigation/bankruptcy would probably wipe them out. Some are personal loans. Others are categorized as services, such as Arnold Lumber’s $4,600.13. Still others are credit card debt, which totals $29,353 since 2006, with the bulk incurred in 2007.
Since his February 2, 2012 filing for loss mitigation, other creditors have been listed by his attorney, James T. Marasco, including a Providence accounting firm ($14,318.75), Westerly Hospital ($3,165.20) and South County Hospital (740.34.)
Prior to the bankruptcy, during the last year, according to papers filed by Chieffo’s attorney, a motorcycle was repossessed and a house in Charlestown was foreclosed. Eight individuals or companies have obtained court judgments against Chieffo within the year preceding his bankruptcy filing. Missing from the papers is a record of the Dodge Ram rental truck for which he paid restitution to avoid arrest.
Even if Chieffo manages to keep the Island Inn from falling to the banks, he still has fire code violations to correct before he can open to guests, town officials say.
Still taking bookings
Despite the Island Home’s uncertainties, it is still possible to sign up for rooms and charter fishing trips through Chieffo’s newly posted website, theislandhomeinn.com. This reporter tested it out this week by clicking to reserve a room on a specific date and obtained a price and a form for a Visa card payment. The Better Business Bureau reports six complaints filed about the Island Home in the last year.
Two men who considered staying there spoke with the Block Island Times in recent weeks. Chris Gergen researched the internet for a fish-and-stay package because he wanted to go to the J&B Shark Tournament. He talked with Chieffo on the telephone about a reservation for a group and says he was told that he could obtain multiple rooms at the Island Home. Fifty percent was due up front through PayPal online, but before he sent the money he read about Chieffo’s troubles, and changed his mind. Instead of coming to the tournament, his group found another captain elsewhere.
Dr. Ed Parkman of Hyde Park, N.Y., found his usual places to stay, the Spring House and the Manisses, were booked on the dates he wanted to come, so his wife, Laurie, searched the web and found the Island Home. They called Chieffo, whom Parkman said described himself as “a world famous fisherman who has TV shows... He spun a huge tale.” The Parkmans decided to spend six days there with four days of fishing, and sent $2,700, charging it to their own credit card which then paid Chieffo through PayPal. Parkman heard the rumors about Chieffo after the fact, and he called him back to ask for a refund. He found the telephone number changed and only an answering machine. Fortunately, he was able to cancel the PayPal invoice through his credit card company.
Could this be the second time Chieffo has filed for protection under the bankruptcy laws? Court records indicate a David Chieffo filed for protection in 1999 in Connecticut and the case was completed in February of 2000. Records of the proceedings and filings are no longer available to the public.
One puzzle in the case is the amount of monthly income Chieffo listed: $14,000. Added up over a year, that equals $168,000, and the filing does not indicate it is limited to summer earnings. His expenses were listed as $11,292 per month, and included his mortgage, insurance, taxes and food, leaving a net surplus of $2,707 per month. Yet Chieffo lists almost no liquid assets.
Thus far Chieffo’s activities have fallen under the civil courts. In order for criminal charges to be filed, there must be evidence that shows intent to defraud, said Block Island Police Chief Vincent Carlone. And even when there is a pattern established over a number of years, each case of debt is judged separately, as though the others do not exist.
Unless the police find intent, the state attorney general’s office will not take the case, and the AG’s office confirmed that there are no charges pending there against Chieffo.
Parkman says the situation is an outrage. “Why is no one doing anything to stop him?” he asked. “This is bad for Block Island’s tourism industry.”